Start up Plant Hire

[GJP-Sport]

Evening all.

Well another newbie here so apologies in advance if I am in the wrong place !

A long story short I've inherited a modest amount of money and want to look into starting a plant hire business.

Got a hundred and one questions and am looking for a steer in the right direction can anyone help here or on the phone please ?

Thank you.

[diggerjones]

Welcome. Why would you want to go into plant hire. Have you had some experience with plant.
There's probably easier ways for your money to work for you. Think property would be mine.

[Muz]

Welcome .. whats your back ground ? .. theres easier ways to make a living I enjoy it .. but I'm 'hands on'

*edit* Ah see ^^^^ diggerjones beat me to it..... sayin the same thing

[GJP-Sport]

Guys thanks for the prompt replies... In honesty I'm a nuts bolts and grease guy don't fancy property of I'm gonna set something up I want it to make a decent living but also something I enjoy.

I've got limited experience but have checked the market out and can see opportunity within my local area.

[Muz]

Guys thanks for the prompt replies... In honesty I'm a nuts bolts and grease guy don't fancy property of I'm gonna set something up I want it to make a decent living but also something I enjoy.

I've got limited experience but have checked the market out and can see opportunity within my local area.

Ok well I'm sure you dont want to share your secret here .. but .. Ive spent the last 25 years watching new guys think they can do 'it' but cant. Unless you have some special skills and balls of steel, it will be a tough road if you want to make anything out of it. You'll work like a dog in any weather, and some days go backwards instead of forwards big time. You need to be fit , and have stamina when the rain is pissing down and have customers shouting at you whilst working to a deadline for the next days hire ... it isnt easy to pay staff to do all this if you cant, cos they want an easy life, and all the money !! Its not impossible .. but .. to say its a challenge is a mild understatement

[GJP-Sport]

Ok well I'm sure you dont want to share your secret here .. but .. Ive spent the last 25 years watching new guys think they can do 'it' but cant. Unless you have some special skills and balls of steel, it will be a tough road if you want to make anything out of it. You'll work like a dog in any weather, and some days go backwards instead of forwards big time. You need to be fit , and have stamina when the rain is pissing down and have customers shouting at you whilst working to a deadline for the next days hire ... it isnt easy to pay staff to do all this if you cant, cos they want an easy life, and all the money !! Its not impossible .. but .. to say its a challenge is a mild understatement

Muz thanks for coming back to me it's appreciated.

I'm looking to run the business purely on a hire basis

Diggers dumpers access platforms etc.

I do have access to a number of machine drivers that I could offer for an all-inclusive hire. So machine and driver

However initially hire of equipment only

[GJP-Sport]

Muz

Can't be all bad surely ?

[ianoz]

Gees Muz ,Have you some horror stories to share of abused gear , to enlighten him with ???

[Muz]

Gees Muz ,Have you some horror stories to share of abused gear , to enlighten him with ???

You mean like ones flooded by sea water, rolled on their sides, rolled on their roofs, crashed under low bridges, bogged up to half way up the cab, countless engine problems with bad fuel, lack of oil, not to mention thousands of bust tracks from ramming into kerbs etc, and thats just the machines ..... "ahhh .. it wasnt me mate ? .. it came like that !"

I didnt say it was impossible but a pure hire business takes a lot of time and even more money.. to make it work. I only got to a point of having no finance outstanding on any kit after 22 years .. think about that, and I started with some capital too

[245dlc]

Knowing what I do about the rental business I would never let anybody operate a piece of equipment that I'm making payments on, let alone a stranger. After 16 years as a Heavy Equipment Operator I am my best operator. About this time last year I rented a Bobcat 324 (1.5 tonne) mini-excavator it had less than a 1,000 hours on the meter and had deep gouges on the counterweight/back door, the dozer blade was bent up to the point you couldn't put the extensions back on, busted off lights, leaking cylinder, and numerous other dents and scratches. I had also rented a Bobcat tracked skid-steer for a landscaping job and the engine chugged enough black smoke you'd think the damned thing was coal fired, not to mention it couldn't fill it's bucket with dry topsoil without the engine stalling. So think carefully about what you propose to do and if you do it stay in the operators seat.

[Muz]

Knowing what I do about the rental business I would never let anybody operate a piece of equipment that I'm making payments on, let alone a stranger.

Its certainly the bit I hate most about the business, watching expensive assets slowly get trashed. The obvious answer is to not always buy new, but thats easier said than done.

I think the main issue is this, most countries need plant hire companies to exist and there is a hire market available. The problem the OP has, is that in the UK atleast, its quite a mature market saturated by big players who are in a constant battle over rates. Its no lie to say that here, hire rates havent changed in 25 years, whilst all the operating costs assocated with running this type of business keep rising. In fact its truer to say in real terms hire rates keep falling, while costs rise. So only the leanest fittest businesses can survive. There are a lot of companies out there operating on the thinnest of margins, and that is a very tough marketplace to survive in.

You can do all the maths you want, crunch numbers you like till you are blue in the face, in the end it could all be for nothing, because the other big problem in this industry is getting paid at the end of it, and thats the real heartbreaker after all the effort and expense that you need to put in.

Niche markets are one way through the maze, tied up customer agreements are another, or just sheer volume is another, but you still gotta get paid at the end of it.

Heres a simple calculation to show how rubbish the money is on the returns you make. Take a 13 tonne digger costing say £70000. Say you finance over 3 years to pay for it ... and you managed to get the money at 5% .. your total repayments are going to be £80500 costing you £2236/month (keeping it simple). A not uncommon rate for that machine is £400/week (although its not a market Ive been in for some time so my rate may be out a little). lets say out of 52 weeks a year you take off 5 weeks for Statutory holidays it leaves you with 47 ... a shit hot hirer will get 80% utilisation of his kit, thats 37.6 weeks of total hire time, so that means it will earn £15040 per annum times 3 = £45120 but it cost you double that ? You tell me where you make money in that game ? The only way you do anything productive is buy second hand or have a trade in to throw at your purchase, either way, it doesent really stack up, because the machine is now worth half of what you paid for it, and you'll have to spend another few £thousand on it cos its undercarriage will be shot .... and remember, all this assumes you even got paid for all your hires !!

[245dlc]

Well put Muz. I've been wanting to get a machine of my own for several years and one of the biggest things holding me back is knowing if there is enough work or not for me to bother investing in a machine. We moved this year partly because where I was living it didn't matter how good of a service you provide or the quality of work it was all about connections I finally got fed up with that attitude and seeing so much shoddy work and decided that maybe we'll try the 'wild west' where things are quite a bit more progressive and people actually want to be here. I also figured that I'll acquire a few crucial tools or pieces of equipment as I can afford it instead of having to scratch together funds at the last minute kind of thing. One of the more expensive things was transportation I bought a used diesel pickup truck 2 years ago and a fuel transfer tank that I carry in the back of it that I actually got for free from my uncle. Next thing will likely be a trailer capable of carrying a machine as heavy as 5 tonnes. Finally I'll find myself a used mini-excavator in the 3 - 5 tonne range....likely a 3 tonner due to legal weight limitations of the truck. I'll also likely have my own place to park it by that time like a house out in the country where I shouldn't have to worry about any city bylaws governing parking machinery on the road or on one's driveway. I don't want the payments to kill me if there isn't any work coming in either so I could be riding a fine line between a junker and a decent used machine....hopefully it doesn't come to that of course. I've worked for fair size outfits that have followed a similar build up to start their business and others who jumped in completely blind and have just about gone broke because of it and others that did go broke.

[v8druid]

Have to say OP - my money'd be going somewhere else - plant is not going to make you a living let alone rich.

I used to run mobile cranes - gave it up a long time ago as all the rates ever did was go down, whilst the overheads went up ...... ballistically sometimes
They were run in conjunction with my fab biz, which realistically tended to subsidise the cranes half the time ...... but we had 'em for our own use on jobs.
stopped the hire game and saved myself £20k a year just on insurance and still had 'em for own use ....... also saved on 5+ mens wages

Obviously self drive is a little different ....... especially in the accountability for damage stakes - 'least I could bollock/sack drivers for damage

Think very, VERY, VERY carefully, before investing a penny in plant hire

[The helpful Broker]

From an insurance brokers perspective

in my experience of working with plant hire firms, One big issue is trust of new accounts - i.e. you hire to someone, the details are fake and you never see the equipment again.

You have to be rigourous and perhaps only open accounts on referral, thats what a lot do now, which is tricky when you are starting out.

Insurance costs are not dreadful, assuming you hire to cpa conditions or similar ?

[Muz]

in my experience of working with plant hire firms, One big issue is trust of new accounts - i.e. you hire to someone, the details are fake and you never see the equipment again.

You have to be rigourous and perhaps only open accounts on referral, thats what a lot do now, which is tricky when you are starting out.

Insurance costs are not dreadful, assuming you hire to cpa conditions or similar ?

If you cant authenticate your punter, or , if its not domestic, and they dont have hired in plant insurance, (and authenticate that!) you are taking a massive risk. .. Welcome BTW